Last Update 07 Feb 26

HLLY: Turnaround Progress And Brand Strength Will Support Future Repricing

Analysts have lifted their price targets on Holley to a range of roughly $4.50 to $5.00, reflecting their view that the company’s turnaround efforts, recent in-line results, and focus on differentiated brands and products support a higher valuation despite a still challenging industry backdrop.

Analyst Commentary

Recent research highlights a mix of optimism and caution around Holley as analysts adjust their models following the latest quarterly update and ongoing turnaround efforts.

Bullish Takeaways

Bullish analysts point to Holley’s quality, differentiated brands and products as a key reason they see room for a higher valuation, even with a challenging industry backdrop.
The in-line Q3 results are viewed as a sign that execution is stabilizing, which supports higher targets in the US$4.50 to US$5.00 range.
Some bullish analysts highlight that Holley is two years into a company specific turnaround, with new management actions described as starting to bear fruit for growth and profitability potential.
The strong post earnings share reactions in the last two quarters are seen by bullish analysts as evidence that the market is rewarding progress on the turnaround story.

Bearish Takeaways

Bearish analysts, even while lifting targets, retain more cautious ratings and point to a still difficult industry backdrop that could limit how quickly Holley can improve results.
There is concern that enthusiasm from sharp post earnings moves, including about a 30% gain after the latest report, may already embed a lot of optimism into the share price.
Some cautious views reference Holley’s auto enthusiast customer segment as connected to broader powersports trends, suggesting that any weakness in discretionary spending could weigh on demand.
Analysts with neutral stances emphasize that, despite progress on the turnaround, investors may want clearer evidence of sustained execution before assigning higher valuation multiples.

What's in the News

Holley Performance Brands plans to return to the PRI Show in Indianapolis from December 11 to 13, 2025, highlighting its Safety & Racing portfolio including Simpson, Stilo, HANS and RaceQuip (Key Developments).
The company is using the 2025 PRI exhibit to showcase a year focused on brand identity, updated product offerings and preparations for potential growth in 2026 for its Safety & Racing segment (Key Developments).
Throughout 2025, Holley’s Safety & Racing team has concentrated on building a foundation for long term growth by strengthening brand identity through events such as the inaugural Saddle Up Global Dealer Summit at Simpson’s New Braunfels, Texas headquarters (Key Developments).
Holley is aligning and modernizing product portfolios across its Safety & Racing brands, including launching a new helmet line designed to meet Snell SA2025 safety standards, with products like RaceQuip’s NX25 and Simpson’s Bandit and Kingsnake models (Key Developments).
The PRI Show presence will also feature a heritage display, including the fire suit worn by Simpson’s founder Bill Simpson in a 1986 Indianapolis demonstration, plus a new book on the Simpson brand history and products from other Holley brands such as Terminator X Bluetooth EFI Kits, MSD Ultra 7AL ignition and Holley Hi Ram intakes (Key Developments).

Valuation Changes

Fair Value: The fair value estimate remains unchanged at US$4.96, indicating no shift in the model’s central valuation output.
Discount Rate: The discount rate has fallen slightly from 11.03% to 10.86%, which modestly increases the present value placed on future cash flows in the model.
Revenue Growth: The modeled revenue growth rate is effectively unchanged, holding at about 5.74%.
Net Profit Margin: The projected profit margin has risen slightly from 9.50% to 9.51%, reflecting a very small adjustment in expected profitability.
Future P/E: The future P/E assumption has eased a bit from 12.23x to 12.16x, indicating a slightly lower valuation multiple applied to expected earnings.

Digital expansion, product innovation, and tariff mitigation enhance market share, margins, and resilience against external pressures.
Strengthening B2B relationships and international growth diversify revenue streams and reduce earnings volatility.
Heavy reliance on ICE aftermarket and slow EV transition exposes Holley to long-term demand decline, margin risks, and challenges from evolving industry, consumer, and technology trends.

Catalysts

About Holley

Designs, manufactures, and distributes automotive aftermarket products to car and truck enthusiasts primarily in the United States, Canada, and Europe.What are the underlying business or industry changes driving this perspective?

Expansion of digital and omnichannel sales channels-including direct-to-consumer e-commerce and third-party marketplaces like Amazon and eBay, which saw over 28% growth-positions Holley to capture greater market share and higher-margin sales, supporting both top-line revenue growth and improved net margins.
Ongoing and disciplined product innovation, evidenced by targeted launches like the Terminator X Bluetooth module and expansion of high-demand product lines, enables Holley to tap into the consumer trend toward customization and personalization, driving sustainable revenue growth and defensible gross margins.
Successful execution of tariff mitigation strategies-including cost-saving supplier relocations and proactive supply chain management-ensures that external cost pressures are effectively offset, preserving and potentially expanding gross and EBITDA margins over the coming years.
Strengthening B2B relationships and continued share gains with key partners, as reflected in 6.5% channel growth and outperforming sell-through rates, diversify revenue streams and drive stability, supporting improved revenue visibility and reduced customer concentration risk.
Strategic international expansion, particularly the early success in the Mexican market and new dealer partnerships, creates new long-term growth vectors and geographic diversification, bolstering revenue potential and smoothing earnings volatility over time.

Holley Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Holley's revenue will grow by 4.8% annually over the next 3 years.
Analysts assume that profit margins will increase from -5.1% today to 10.0% in 3 years time.
Analysts expect earnings to reach $68.7 million (and earnings per share of $0.54) by about September 2028, up from $-30.4 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.4x on those 2028 earnings, up from -14.4x today. This future PE is lower than the current PE for the US Auto Components industry at 17.7x.
Analysts expect the number of shares outstanding to grow by 0.59% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 11.05%, as per the Simply Wall St company report.

Holley Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Holley's core business remains dominated by internal combustion engine (ICE) aftermarket products, and although there are incremental launches and operational improvements, the company's lack of clear EV and hybrid-focused product momentum leaves it highly exposed to the accelerating long-term shift from ICE to electric vehicles, risking significant top-line revenue pressure and eventual market shrinkage in the coming decade as secular EV adoption grows.
Despite current gains in gross and free cash flow margins via supply chain initiatives and tariff mitigation, Holley's long-term dependence on a narrow, enthusiast-driven market and heavy reliance on U.S./North American channels (with only gradual, limited international expansion like Mexico) suggests vulnerability to secular trends: declining interest in DIY hobbyism among younger generations, reduced car ownership, and a shrinking population actively modifying vehicles – trends that could gradually erode revenues and long-term earnings power.
The strong current results (like record free cash flow) heavily depend on ongoing cost-savings, mitigation of temporary tariff risks, and strategic pricing actions – but continued inflationary and macroeconomic headwinds, coupled with the company's admission of taking a "conservative" demand outlook in the back half and lack of robust volume growth visibility, create risk of margin compression and lower free cash flows if the external environment deteriorates or if price-driven gains prove unsustainable.
Holley's growth strategy relies significantly on brand portfolio expansion and M&A-driven synergies, but a continued aggressive acquisition approach brings integration, execution, and write-down risk; if post-merger synergies or planned efficiencies do not materialize-or if acquired brands fail to adapt to structural industry shifts-Holley may face impairment charges, operating cost overruns, or ultimately fail to deliver on its promised EBITDA and margin targets.
The company's proactive supply chain and tariff mitigation efforts, including supplier relocations and price adjustments, may mitigate near-term margin impact but increase supply chain complexity and operational risk. Furthermore, ongoing industry consolidation among larger distributors and rising technological complexity of newer vehicles (tighter OEM controls, more electronics) may over time reduce Holley's pricing power and hinder the ability of consumers to use/modify certain aftermarket parts, weighing on both revenue growth and net margin potential.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $3.917 for Holley based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $6.0, and the most bearish reporting a price target of just $3.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $683.8 million, earnings will come to $68.7 million, and it would be trading on a PE ratio of 9.4x, assuming you use a discount rate of 11.1%.
Given the current share price of $3.67, the analyst price target of $3.92 is 6.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Digital And Omnichannel Expansion Will Unlock Future Value